About Early Payment Discounts

If the Tax Discount/Allowance field is selected for Tax System 1 on the Tax Systems form, and an early payment discount exists, then when a regular or landed cost voucher is created, the discount and non-discount amounts must be calculated differently.

The early payment discount initially is based on the voucher total, including all charges and VAT on the voucher. At the moment of payment, if the early payment discount is applied, the discount amount is split into two parts:

Net discount amount, calculated by applying the discount percent that is defined in the payment terms to the voucher total, exclusive of the VAT.
VAT adjustment, calculated by applying the discount percentage that is defined in the payment terms to the total VAT amount.

This discount affects these areas of the system:

A/P Check Printing/Posting
A/P Payment Distributions
A/P Payments
A/P Posted Transactions Detail
A/P Posted Transactions Summary
A/P Quick Payment Application
A/P Vouchers and Adjustments
A/R Payment Distributions
A/R Payments
A/R Posted Transactions Detail
A/R Posted Transactions Summary
A/R Quick Payment Application
EU VAT Report
Generate A/P Transactions
Generate Landed Cost Vouchers
Purchase Order Receiving
VAT Report

Example: A/P Voucher Distributions

The Discount Amount is calculated against the sum of the Purchase Amount and the VAT Amount, as shown in this table:

Concept	Tax Basis	VAT Percent
Purchase Amount	400.00
Tax Basis	400.00
Plus VAT	76.00	19%
Voucher Total	476.00
Minus Discount	14.28	3%
Net Voucher Amount	461.72

Tax Date for Early Payment Discounts

For Accounts Receivable and Accounts Payable payments made before the discount date and where the tax discount has been applied, the EU VAT Report shows the payment date as the Tax Date. If these dates fall outside the specified Tax Period Start and Tax Period End report options, these rows are not included in the report.